Keeping Your Money Resolutions in the New Year

If you have made New Year's resolutions regarding your finances and money, you must read this article that offers strategies to help you meet your financial goals in 2008. You can get out of debt, start a savings program, improve your credit score, and more.


Keep your money resolutions
Nine strategies can help you reach goals
07:40 AM CST on Monday, January 7, 2008
By PAMELA YIP / The Dallas Morning News pyip@dallasnews.com

"Now it's time to get down to business. What do you really want to accomplish financially for 2008? Pay off debt? Save more money?

Whatever your goals are, how you lay them out and work toward them will determine whether you will succeed.
"There's no substitute for self-discipline," said Greg McBride, senior financial analyst at Bankrate.com, a personal-finance information Web site. "At the end of the day, your effort to improve your financial standing will only work if you can stick with those strategies throughout the year."
Here are the most important things you should do to make 2008 a financially successful year:
1. Make sure your goals are realistic. "Start small," said Rick Salmeron, certified financial planner at the Salmeron Financial Network Inc. in Dallas. "One reason many money-conscious resolutions fail is because we bite off more than we can chew. Don't try to do too much at first."
Write down your goals because seeing them on paper makes them more concrete and gives you a higher chance of success.
2. Be specific about your goals. "You might be planning on setting a goal related to investing, which is important but very vague and easy to forget about," said Casey Kupper, a certified financial planner at Quest Capital Management in Dallas. "Instead, state that you're going to invest a certain amount each month. Take your resolution of 'I'm going to invest this year' to 'I'm going to invest $250 a paycheck into my 401(k) this year.' "
Tell your friends and family of your goals because they will help hold you accountable.
3. Pay off or pay down your consumer debt. Whatever your goals are, you will be seriously blocked from achieving them if you're shouldering mountains of credit card debt.
To get rid of your debt, reduce your spending or increase your income. The ideal is to do both, but the more important component is to cut your spending.
No amount of additional income will be effective if you continue to spend more than you make. You'll constantly be behind.
Stop using credit cards for anything other than necessities. Use them only in an emergency or in a situation where you have to use one to reserve a hotel room, rental car and the like.
Even then, use the card only if you know you can pay the bill off on time and in full.
Before you make any purchase, ask yourself whether you really need it, and whether you can pay for it with cash. If your answer is no to both questions, skip the purchase.
Don't expect instant relief from debt.
"If you have debt, realize that it took you a while to get into debt, and it will probably take you longer to get out," said Bill Hardekopf, chief executive of LowCards.com, a credit card information Web site. "Do not get discouraged, no matter how much you can pay off or how long it takes. Being debt-free is worth the effort."
4. Start a savings program, no matter the amount you're able to put away. Getting rid of your credit card debt will enable you to save more, but there's no shame in saving $20 to $30 each paycheck if that's all you can afford. The key is to continue saving consistently and let that money grow.
Make it easy on yourself by signing up for an automatic savings plan that enables you to have a fixed amount of money transferred regularly to a high-interest savings account.
"The biggest obstacle to saving is not being in the habit of saving," Mr. McBride said.
As you see your account grow, "that becomes self-reinforcing," he said.
"As the amounts result in a larger and larger balance, you become less reliant on debt to cover the next unplanned expense," Mr. McBride said.
5. Boost your retirement savings. Sign up for your employer's tax-deferred 401(k) retirement plan and have the money automatically deducted from your paycheck.
"That money will be taken out before you even have a chance to spend it," Mr. McBride said.
If your employer matches your contribution, at the very least, make sure you're contributing enough to get the match. If you don't, you're leaving free money on the table.
Even if your employer doesn't match your contribution, it's still a good idea to contribute.
That not only gives you a head start on retirement saving, it also saves you money on your tax bill. Since your contributions are made with pre-tax dollars, your current taxable income is lowered.
Fund your Individual Retirement Account, too.
"March toward retirement security in double-time," Mr. McBride said. "You have until April 15 to make your 2007 IRA contribution, and then start working toward that 2008 contribution. A little bit can mean a whole lot later."
6. Develop a spending plan or budget.
"A budget is like a roadmap," Mr. McBride said. "Decide on a destination, determine the route to get there and monitor your progress along the way."
Until you know where your money is going every month, you don't have control over your finances, and you will be unable to consistently save for the future or make headway on your debt.
Consider tracking expenses for two weeks, so you can identify areas where you can cut back, said experts at Consumer Credit Counseling Services of Greater Fort Worth.
A budget will help you determine whether you're meeting your goals.
"If you figure out that you're able to throw an additional $250 month toward debt repayment, you then you have to hold yourself accountable to make sure that you are indeed throwing an extra $250 a month toward your debts," Mr. McBride said.
7. Check on whether you've covered your insurance needs. Do you have enough life insurance to cover your family, should you die unexpectedly?
Also important but often overlooked: Do you have enough disability insurance to cover you if you can no longer earn a living? That ability is your greatest asset.
Are your health insurance and your coverage for auto and home adequate? What about long-term care needs?
8. Make day-by-day money resolutions. You can say something like, " 'Today, I will not use my credit cards. Today, I will place all of my loose change in a mason jar,' " Mr. Salmeron said.
"Most people know what is good for them and what is not, so use this method to try to reduce the bad things, and enhance the good things one day at a time," he said.
9. Don't let an occasional setback discourage you from achieving your goals.
"Expect a challenge when trying to achieve new goals, but don't give up," said Marianne Gray D'Aquila, president of Consumer Credit Counseling Services of Greater Fort Worth. "Once you have decided what you want to accomplish, be confident. A little discipline can help you enjoy a happy and prosperous New Year."

Take it one step at a time. You can improve your financial situation and meet your goals for the New Year. Don't give up! Keep trying and you can make it.


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What the Credit Crisis Means for Borrowers

What the Credit Crisis Means for Borrowers

The current credit crisis is making it increasingly difficult to obtain credit if your credit score is below 700. While there are ways to improve your credit score, it does take some time.

A few of the best ways to improve your credit are to: 1. pay your bills on time every month; 2. don't use more than 30 percent of your available credit; 3. don't make credit applications that you don't really need; and 4. check your credit report for errors and dispute them immediately if you find any . Just remember, it will take many months to improve your credit score - you must be patient.

What if you don't have months to wait on that new home or car? Talk to a reputable credit repair agency for help. Often, they can help to take negative and erroneous items off your credit history to improve your score in a relatively short period of time.

Lexington Law Firm is one such agency that help you repair your credit - even if you have a bankruptcy on your history they can usually help.

Don't wait - if you have been denied credit or know that you have poor credit - let Lexington Law Firm help you today.


Tag: What the Credit Crisis Means for Borrowers

5 tips to improve your credit score: Financial News - Yahoo! Finance

5 tips to improve your credit score: Financial News - Yahoo! Finance: "Bankrate.com
5 tips to improve your credit score
Tuesday June 26, 6:00 am ET
Cheryl Allebrand

If you've pulled your credit score and are disappointed by what you see, here are some simple things you can start doing now to improve your score. Credit counselor Bruce McClary of Richmond, Va., suggests these five ways to boost your credit score.

1. Get it right
2. Pay your bills on time
3. Step away from the edge
4. Commit for the long haul
5. Look before you leap

1. Get it right
Accuracy is the first thing to address and the fastest way to boost your score. Find and fix any mistakes that could be pulling your score down. Your credit score is based on the information contained in your credit reports. "For someone who has never seen a credit report or hasn't checked in several years, I recommend getting all three and looking at all of them, because each contains different information," says McClary. For those who check regularly, use the free credit reports to monitor your accounts. Stagger your requests for the free reports so you see one every four months. "With ID theft running rampant, it seems like you need to check more often these days," McClary says. "Maybe once a year isn't enough anymore."

2. Pay your bills on time
Paying on time helps build a healthy payment history. And, as the largest factor in determining your credit score (at 35 percent), it's the best way to rebuild damaged credit. Even if you've had credit problems in the past, depending on how many creditors were involved and how far past due your accounts were, a good 12-month payment history can usually produce noticeable results. "If you fell off for a few months, a year could get you back on track," says McClary.
Expect information about past-due payments to stay on your report for up to seven years. Your score can still improve during that time as long as you make steady, on-time payments. Seven years after the date of last activity the mark may drop off, but may not disappear completely because it can still be sent to collections. The avenues of collecting the money are not cut off, and the calendar resets on the date of activity when reassigned.

3. Step away from the edge
If you think you're doing everything right, take a look at the amount of your outstanding debt and your debt-to-credit ratio. Reducing your credit card balances will score you points and is especially important if you are flirting with the limit on any of your cards.
You never want to be maxed out, and ideally you'll be using only about 40 percent of your limit on any one card. Spreading debt between cards is better for your credit score than keeping it all in one place.

Next, focus on the amount of outstanding debt (30 percent of your score). Together, outstanding debt and payment history account for 65 percent of your score. Pay off your debt rather than moving it around. "A lot of people like to play the balance transfer shell game. Closing out an account and transferring that over means that you're increasing your debt ratio. You're reducing the overall amount of available credit and driving up the balance on the other," says McClary. Ultimately if the credit limit is equal or higher on the new card, it would be a wash over time, but in the short term, this is not smart.

4. Commit for the long haul
Fifteen percent of your score is determined by the length of time you've held a credit relationship. Don't close any accounts if you plan to shop for a mortgage or other loan for which you'll need a good score. Opening new cards and closing old accounts negatively impact your credit score in the short run, so avoid making these moves shortly before applying for a large loan. Deciding when to close an account is a tough question, says McClary. "It depends on the overall mix of credit and how many accounts you close. I would stagger it out. Put as much time between those events as possible, because it will affect financing terms," he says.

While you'll want to have a couple of cards to develop a credit history, adding more credit card debt can be a dangerous thing, McClary cautions. "Limit the amount you get to two and keep balances low and pay them off quickly. It's not necessary to have more than a couple of credit cards, and be careful using them because life circumstances can change." Of equal importance is establishing a savings account to fall back upon.

5. Look before you leap
When you apply for a loan or a credit card, lenders check your credit. These inquiries can put a temporary dent in your credit score. Start your loan search by shopping and comparing rates rather than applying for a loan first and deciding later. If you can do all your shopping within the same month, all the better. Mortgage and auto loans are counted as one inquiry if they fall within a 45-day period in the FICO scoring model.

Inquiries have the least impact as far as overall weight. Inquiries, types of credit and the number of loans you have play into the remaining amount of your score.

"I'm always amazed at how people tend to concern themselves with someone making an inquiry when they should be focusing on their payment history," McClary says. "I think if you want to stop solicitations, opt out. But if the motivation for opting out is to have an impact on your credit score, then it's not efficient." Save a few trees, opt out.

Tip: To opt out of unsolicited offers, visit OptOutPrescreen.com or call (888) 567-8688. "

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